Consumer rewards or incentive systems have become an integral part of retail point of sale and internet commerce marketing. Retailers have multiple objectives which include: attracting consumers to increase the amount of their purchases; inducing consumers to increase the frequency of their purchases from a particular retailer, and establishing a loyal purchasing pattern by the consumer with that retailer; increasing the number of consumers who purchase from a particular retailer, and to obtain demographic data from consumers about their purchasing. Reward systems are often customized for each rewards issuer, hence the recipient must carry a different token for each retailer in order to receive that retailer's consumer incentives.
Hence, in addition to their debit and credit cards, consumers are now encumbered with additional cards to carry, all of which can easily be lost, damaged or stolen. After initially signing up with these incentive programs, consumers soon dispense with their incentive cards, therefore, either the consumer incentive program offered by the retailer fails or is not as successful as it was once thought to be.
Additionally, the use of cards by consumers for accessing such rewards systems is costly and disadvantageous. Namely, retailers must absorb the cost of producing such tokens and then distributing them to consumers. Furthermore, as tokens are lost, damaged, or stolen, retailers absorb the cost of replacing the token to the consumer. Further, retailers use these tokens to only identify the consumer's rewards account, rather than being able to identify the consumer directly.
This presents several problems for the retailer. In the event that the consumer's token is stolen or lost, a fraudulent party can present such a rewards token in order to obtain the cost-savings or other benefits to which they are not rightfully entitled.
As a result, the retailer must bear the cost of inadvertently providing these incentives to a consumer who has had not the requisite purchasing patterns to benefit from them. Hence, the retailer is literally rewarding the wrong party and paying twice for this mistake. This is because the original consumer will likely demand from the retailer their rightful rewards even without having the token to authenticate their account. The retailer will thereby pay for the rewards for the genuine consumer as well.
Last, such tokens have additional costs to the retailer in that the desired demographic and purchasing pattern data can be easily de-linked once the token is separated from the consumer. This occurs because a fraudulent party makes purchases with a token that incorrectly identifies the user's rewards account as the original consumer's, thereby attributing such purchases by the fraudulent party to the original consumer's purchasing profile. At the same time, when the genuine consumer demands their rightful rewards upon making their own purchases without their appropriate rewards token, the retailer must use another, likely generic (e.g., store account), rewards account in order to accommodate that consumer's requirement of benefiting from the incentives rightly due to them based on their purchases. Hence, the retailer's access to accurate consumer purchasing patterns can be significantly diluted by such unreliable information, thereby causing the retailer additional losses as their target-marketing campaigns and inventory strategies are adversely affected by this inaccurate demographic data.
The use of various biometrics, such as fingerprints, hand prints, voice prints, retinal images, handwriting samples and the like have been suggested for identification of individuals. However, because the biometrics are generally stored in electronic (and thus reproducible) form on a token and because the comparison and verification process is not isolated from the hardware and software directly used by the recipient attempting access, the problem of having to carry cards is not alleviated.
It has also been suggested that smartcards can also be used for tracking the rewards accrued by a consumer. However, smartcard-based system will cost significantly more than the "dumb" card. A smartcard costs in excess of $3, and a biometric smartcard is projected to cost in excess of $5. In addition, each point of sale station would need a smartcard reader. Furthermore, the net result of "smartening" the token is centralization of function. This may look interesting during design, but in actual use results in increased vulnerability for the consumer. Given the number of functions that the smartcard will be performing, the loss or damage of this all-controlling card will be excruciatingly inconvenient for the cardholder. Losing a card full of accrued rewards will result in the loss of the accumulated rewards.
There is a need for an electronic rewards transaction system that uses a strong link to the person being identified, as opposed to merely verifying a recipient's possession of any physical objects that can be freely transferred.
There is a further need for an electronic rewards transaction system is ensuring consumer convenience by providing authorization without forcing the consumer to possess, carry, and present one or more proprietary tokens, such as man-made portable memory devices, in order to accumulate the rewards. Anyone who has lost a card, left it at home, had a card stolen knows well the keenly and immediately-felt inconvenience caused by such problems. Therefore, there is a need for an electronic biometric rewards transaction system that is entirely tokenless.
There is another need in the industry for a rewards system that is sufficiently versatile to accommodate both consumers who desire to use personal identification numbers (PINs) for added security and also consumers who prefer not to use them.
Lastly, such a system must be affordable and flexible enough to be operatively compatible with existing networks having a variety of electronic transaction devices and system configurations.
As such, it is an objective of the invention to provide an electronic rewards system and method that eliminates the need for a rewards recipient to directly possess any personalized man-made token which is encoded or programmed with data personal to or customized for a single authorized rewards recipient, such as a smart card, magnetic swipe card or a personal computer with resident recipient-specific data.
It is another object of the invention to provide a computer system that is capable of verifying a rewards recipient's identity, as opposed to verifying possession of propriety objects and information. It is yet another object of the invention to verify rewards recipient identity based on one or more unique characteristics physically personal to the rewards recipient. Yet another object of the invention is to provide a computer system wherein access is secure, yet designed to be convenient and easy for a consumer to use.
Yet another object of the invention is to enable a rewards recipient to earn incentive rewards which are either immediately provided to the rewards recipient or are stored for later access by the rewards recipient. Yet another object of the invention is to enable retailers to correctly identify a consumer using the computer system so that their purchasing patterns can be linked to their personal demographic data. In this way, the retailer can more efficiently deliver products and services to pre-identified or interested consumers.
Another objective of the invention is that the rewards issuer be identified by an electronic identicator, wherein the rewards issuer's identification is verified. Therefore, the rewards issuer would register with the electronic identicator a rewards issuer identification data, which can consist of any of the following data: a rewards issuer hardware identification code, a rewards issuer phone number, a rewards issuer email address, a rewards issuer digital certificate code, a rewards issuer rewards account number, a rewards issuer biometric, or a rewards issuer biometric and PIN combination.
Another objective of the invention is to be added in a simple and cost-effective manner to existing terminals currently installed at points of sale and used over the internet. Yet another objective of the invention is to be efficiently and effectively operative with existing financial transactions systems and protocols, specifically as these systems and protocols linked to the processing of electronic rewards programs.